What Does the Sherman Antitrust Act Have to do With The Rams Moving to LA?

A number of NFL teams have been considering relocating elsewhere for quite a while now.

Many have been waiting for someone to blink for years, and finally, one actually made the move: the St. Louis Rams will be the Los Angeles Rams when the 2016 season kicks off in September.

The process of relocating a team is actually a complicated process, relying on negotiation and formed by a history involving bad blood, lawsuits, and more than 100 years of American antitrust legislation.

Craig Ashton started off by summarizing recent history, namely that the Chargers, Rams, and the Raiders have all been mired in negotiations to move to Los Angeles. Given that the city can at most become home to two teams, the fact that three teams wanted to skip their respective towns meant that in some respects, they have been competing with one another. And not only that, but there have been multiple sites nominated for a new stadium, with the two most likely choices being in Inglewood and Carson. During negotiations, Inglewood won out at as the home of the new stadium. But this didn’t answer the question of who would actually be playing in it…

Team relocation isn’t just a socially messy process. It’s a technically and legally convoluted process.

Craig continued: “Essentially, the way the relocation process works is that you’ve got to get two-thirds of the 32 [NFL team] owners to approve it, and then, really, the interesting thing here, and it really stems back to the antitrust action that was filed [in 1978 by the Los Angeles] Coliseum Commission against the NFL, when the Raiders were basically precluded initially from moving to Los Angeles.

“So, what happened was, is the Coliseum Commission said, ‘Look, bottom line is.. this is gonna bring a lot of business to L.A… and you’re saying [the Raiders] can’t relocate in a free society that’s supposed to allow for free commerce? [Well], we’re saying that’s a violation of the Sherman Antitrust Act.’”

The Coliseum Commission filed suit against the NFL, with the Raiders joining in on the side of the Commission many months later. After deliberations, the jury couldn’t come to agreement, resulting in a hung jury. After a second trial, the jury found in favor of the Coliseum Commission and their allegation that the NFL violated the Sherman Antitrust Act.

“So now the way that the NFL works is that, there’s got to be a good faith discussion with a [team] and the [owners of the] stadium that they’re in… If [the stadium] can accommodate the team, then the team stays.”

This way, the NFL and team owners avoid potentially discriminating against stadium owners, potentially inviting another antitrust suit.

“And so in this case, in St. Louis, they had a sweet deal where it was only $500,000 a year for the lease, but there was a codicil in the clause for the stadium in St. Louis to say, ‘Hey, if you’re not state of the art… we get to move.’ And they listed 12 factors, including the stadium’s efforts, the economic situation of the team, markets, and also considered things like the team’s footprint in the community. And ultimately, the St. Louis Rams and the owner said [they wanted] to move. And the Chargers said the same thing, and so did the Raiders.

“So the NFL—and this is where the franchisor/franchisee issues come into play—[said that it agreed] that the Chargers and the Rams would be a very good fit for Inglewood in Los Angeles, because of the fan base from [when the Rams were originally in Los Angeles], and the Chargers with the proximity to San Diego.

“So, the way you get to restrict the free movement of these teams is by the contract that the owners sign with the NFL, which is essentially like the same contract that a franchisee of a Taco Bell signs [with the owner of Taco Bell], so that you can’t start serving Big Macs at a Taco Bell. There are certain parameters in the free exercise of commerce within the confines of the contract that you sign.”

These contractual restrictions on the flexibility that team owners have, in combination with the careful balance between stadium owners’ rights and responsibilities to the teams they serve, allow for everyone (ideally) to get a fair deal.

To close, Craig summarized the complicated chain of events that led up to the current state of things: “[Because of] the antitrust action that was brought by the Coliseum, which then caused the NFL to change their rules, which made the process incorporate a good faith discussion with the stadium before the team asked to be relocated, [which required that any move had to be] voted on by two-thirds of the owners, [the end result was that] 30 out of 32 said Chargers and Rams could move, Raiders are out.”

Chances are that when legislators passed the Sherman Antitrust Act in 1890, they probably never foresaw the rise of the billion dollar sports industry, and how their legislation would affect millions of fans of a sport that hadn’t even been invented yet. But, thanks to Senator John Sherman, and a team that wanted to leave the Bay Area for sunny Southern California a few decades later, St. Louis is without a team, and San Diego may soon suffer the same fate.

One thing that is a bit ironic: The team that originally forced the NFL to overhaul their team relocation policies, the Oakland Raiders, is stuck right where it started: in a crumbling stadium in the humble city of Oakland.

No Comment

Comments are closed.

Tell Us About Your Case

Name*

FirstLast

Email*

Phone*

Tell Us About Your Case

Zip Code*

Disclaimer*

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.